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Teaching the Quantity Theory of Money: A Simple Classroom Game
No full textThis paper presents a classroom exercise that helps students understand the quantity theory of money and the implied relationship between money supply growth and inflation. In addition, the role and meaning of velocity is highlighted. The activity is easily implemented and only requires paper, pencil, and a spreadsheet to record data generated by the students. One major advantage of this game is that the outcome will almost always support the theoretical implications of the quantity equation. This is opposed to other simulations, which can sometimes differ dramatically from the model\u27s prediction
A VBA Solution to Modern Portfolio Theory
No full textThe purpose of this article is to provide finance instructors an example of how to teach students to integrate Visual Basic for Application (VBA) into a modern portfolio theory application. Using tactical asset allocation as an example, we show how to teach students to use Excel to (1) collect refreshable data, (2) organize the data into input, (3) construct an efficient frontier, and (4) use VBA to automate the process. Our step-bystep methodology is intuitive and can be used for teaching how to integrate VBA into other dynamic and integrative financial models
Know Math or Take a Bath on a Finance Final Exam
No full textMath is central to finance education, yet three-quarters of this sample of 159 introductory finance students lack critical quantitative skills on the first day of class, leading to overall underperformance. By utilizing criterion-referenced mathematics pretest items and matching applied finance posttest items, we find that students with substandard math skills rarely catch-up in the quantitative aspects of introductory finance. Indeed, the pretest determines a significant proportion of final exam performance, with the average student gaining a meager 5% between pretest and posttest. We discuss curricular implications of these findings and research-based approaches to facilitate course readiness
Teaching the Causes of Great Depression to College Students: Evidence from History, Economics, and Economic History Textbooks
No full textWe survey the treatment of the Depression in college-level textbooks for courses in US history and economics. History textbooks emphasis on inequality, the stock market crash, and underconsumption as the primary causes does not reflect the consensus of economic historians. Introductory economics textbooks use the Great Depression as an example to illustrate macroeconomic concepts in ways aligned with the research consensus, which emphasizes declining aggregate demand and issues related to monetary policy and the financial system. History textbooks could be improved by focusing more on bank failures, the actions of the Federal Reserve, monetary deflation, and declines in autonomous spending
Dave Ramsey’s Personal Finance: A Primer and Critique
No full textAuthor and radio host Dave Ramsey advises millions of people on personal finance. Starting from the assumption that people are not good at maximizing their own utility, he recommends a rules-based approach that often directly contradicts conventional instruction in personal finance. This article shows how Ramsey’s recommendations follow from his behavioral assumptions and highlights some of his specific recommendations about financial products and services that are at odds with traditional personal finance. After making these contrasts, the article outlines implications for educators who, whether they agree with Ramsey’s approach or not, should understand the strengths and limitations of his approach
The ABCs of Modified Bond Duration and WXYZs of Bond Convexity
No full textBy breaking the mathematical derivation of Macaulay Duration, Modified Duration, and Bond Convexity into smaller easily calculated component parts, a more manageable means of calculation for these bond measures emerges for the student. Further, an Excel spreadsheet or an algorithm within a programming language can also be implemented using these smaller component calculations. The Excel template provided can be made into an assignment or used as a resource for the student
A Pedagogical Comparison Between the use of Instructor-Led In-Class Cases and Student-Led Out-of-Class Cases
No full textThis study compares the attitudes and learning outcomes of students in sections of introductory corporate finance courses. The study was conducted at two different universities. Three sections of the course were taught using the lecture method supplemented with a student-led out-of-class case study project. Three other sections of the course were taught using lecture combined with an instructor-led in-class case study project. The students were given pre-tests and post-tests in each section to determine changes in attitudes and learning. Students in both types of course achieved similar learning outcomes. Students found the subject of finance more interesting when participating in the student-led out-of-class case study project. Students found the course less difficult when participating in the instructor-led in-class case study course
Financial Industry Certification Preparation and “Teaching to the Test”
No full textThis paper addresses two aspects of offering finance certification training programs at the university level. During the spring term 2006, Southern New Hampshire University offered (in conjunction with a large, diversified financial services company) a finance elective course to prepare students to sit for the FINRA Series 7 General Securities Registered Representative Examination. Firstly, the paper provides a brief background on developing a specialized academic course working in cooperation with a corporate entity. Secondly, the paper explores the academic ramifications of delivering the course in a “teaching to the test” format instead of a more typical academic course delivery
Math Skills and Everyday Problem Solving
No full textGiven the importance of mathematics to economic education, we administer a test of basic math skills to 696 students enrolled in various college economics courses in order to understand the factors influencing a student’s ability to apply basic math skills in practical settings. Students with strong elementary math skills perform significantly better in applied contexts and we find that taking more math classes in college improves a student’s ability to apply mathematics substantially. Interestingly, our results suggest that students with greater personal financial responsibility in funding their education do significantly better in understanding and applying basic math skills